After 25 years, the UK customs authority, HMRC is closing its CHIEF system on March 31st 2023.  CDS will replace the system at the end of September 2022. Whilst the transition has been delayed several times, there are indications that this is a hard deadline. New importers can no longer be registered to use CHIEF and must use CDS.

There are urgent and immediate steps that must be taken if you are affected by this change:

  1. Ensure that you have access to the Government Gateway account. The company Government Gateway administrator may need to set up additional standard users for access to CDS only.
  2. Register for CDS via Gateway account.
  3. Finance will have to set up a Direct Debit for your duty deferment account on CDS. NOTE: do not cancel your existing CHIEF Direct Debit until the transition is complete and all your imports go through CDS.
  4. Approve your agents to use your Duty Deferment Account (DDA) on CDS once you register.

Some of our clients see this as an opportunity to fully review their customs landscape. With so much change to legislation since Brexit, we recommend this approach as a sensible solution. Customs is an audit based control and HMRC have 3 years to go back on your records. Small issues now can snowball into large exposures in the future.


What is changing?
CDS requires additional pieces of information compared to CHIEF. We believe these changes may cause issues for some businesses as in some instances the data may be difficult to provide. For example, the chemical industries will now require the CUS number for all chemical products. We know from our client conversations that this will cause significant issues for businesses who struggle to reconcile the HR codes and CUS numbers on their systems.

IMPORTS: 76 data elements now required compared to 68 boxes in CHIEF
EXPORTS: 65 data elements now required compared to 45 in CHIEF

We recommend that businesses read and fully understand what the changes mean to their operations. A small project now can save considerable time in the future.

If you are worried about the implications of these changes, please speak to us ASAP.

What is the risk?
CDS is a major learning curve for both agents as well as importers. The new process will take time to bed in and we expect error rates to be high. A right first time approach will allow peace of mind that your business is not sleep walking into compliance issues down the road.

Customs audits are inevitable. Typically, businesses will be audited every 3-5 years. Our recent freedom of information request shows that HMRC customs audits are up 19% year on year and penalties arising from these audits are up 28%.

There are two major factors to be aware of with the change to CDS:

DELAYS: Entries where data is missing are likely to be pushed to the back of the queue by agents, leading to delays in your supply chain.

COMPLIANCE RISK: If declarations are made incorrectly, for example, wrong incoterms included, then this may lead to either an over or under payment of duty. Whilst this may be relatively insignificant on an individual basis, once compounded over 3 years, this could lead to large exposures or erode margins.

A way forward?
The first step is to work out if this is a project you wish to undertake internally or if you wish to engage with a consultant. As previously mentioned, some of our clients are using this as the catalyst to do a deep dive review on their wider customs landscape to get any skeletons out and resolved. Carrying bad data from the old system to the new system will only store up problems for the future.

Specific Project

  1. Working out what is new, how this will be determined and worked into the customs process
  2. Initial high-level presentation from us plus workshop to determine what is needed, how that data can be obtained and provided to agents
  3. CDS training from general ‘awareness’ through to more detailed operational considerations, e.g. how to read a CDS import entry and what data elements should be checked.


A wider project taking a holistic view

Barbourne Brook offer advice ranging from one off project work through full Customs Landscape reviews and ongoing Customs Support. Using tried and tested methodology, we know exactly which questions to ask and where your pain points may lie. If you are serious about customs compliance then working with a consultant is a sensible place to start.


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About Barbourne Brook

Barbourne Brook are a proactive team of customs duty planning experts with a wealth of knowledge and insight in the customs sphere, offering scalable solutions backed by industry-leading technology.

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